In many cases, the sum insured does not correspond to the insured value. If the sum insured in the insurance policy is set too low, this is a case of underinsurance. From small deviations to existentially threatening dimensions – underinsurance always harbors a risk.

Underinsurance versus overinsurance

In addition to the correct insured value in buildings insurance, there are two extremes: underinsurance and overinsurance.

Underinsurance always exists if the sum insured is set lower than the actual insured value of the building to be insured. This means that the restoration costs for the same type and quality are higher than the sum for which the house was insured. In this case, the following problem arises: in the event of a claim, the insurer may reduce the benefit proportionately and the policyholder must pay the difference out of their own pocket.

You can find out exactly how the reductions result in the context of underinsurance in the following video.

If there is overinsurance, the building is sufficiently insured. In this case, the sum insured is higher than the actual insured value of the building. Although there is no risk of a deduction for the policyholder in the event of a claim, the policyholder has paid excessively high premiums.

These examples clearly show that it is always worth regularly checking the insurance value. The current dynamic rise in construction costs also underlines the need for a correct valuation.

Underinsurance – how to avoid it?

1. caution with the assumption of sums insured

Caution should be exercised when taking out buildings insurance if old policies are taken over. Mistake number one: Simply take over the sum insured from the previous contract. Always ask when the sum insured was last determined. If this was more than 5 years ago, the sum insured should be recalculated and adjusted. Is there any documentation of this?

Here you have the opportunity to create a building report with Wert14. It is the best consulting documentation for the valuation. The insurance value should also be checked again when buying a property and the corresponding change of ownership. This is the only way to rule out possible underinsurance or overinsurance.

2. notification of structural changes

Have there been any structural changes to the insured building in the meantime? Policyholders should always notify the insurer in good time of any value-enhancing conversion measures or renovations to the property (e.g. extensions and conversions such as dormers, conservatories, PV systems, new windows, floor coverings) so that these can be taken into account in the insurance policy.

3. living space as the basis for calculation

If no sum insured has been agreed, but only the living space, this can also lead to underinsurance. Namely, if the reported living space does not correspond to the actual living space. This can happen, for example, if the roof has been subsequently converted into living space. In this case, a subsequent declaration must be made. It becomes problematic if, in addition to the individually defined insured living space, a different area calculation has been made. For example, according to the Living Space Ordinance (WoFlV) or according to DIN 277.

4. waiver of underinsurance by the insurer

In the best case scenario, the insurance company will offer a so-called underinsurance waiver. If an underinsurance waiver has been agreed, the insurance company will usually also cover the difference (in some cases this can also be fixed up to a certain amount) that has arisen in the event of possible underinsurance of the building due to an underestimated insured value.

5. building valuation with Wert14

Insurance brokers and agencies as well as insurance companies can rely on the digital building valuation tool Wert14 to determine the correct insurance value. In some cases, the insurance values are determined fully automatically and only need to be checked for plausibility. Numerous well-known insurers already grant underinsurance waivers (UVV) in the millions on the Wert14 BuildingReport. You can find an overview of all UVV clauses on the Value product page.

In general, the following applies: regularly check the insured value (with value14) and make any changes to the insurance policy immediately.

Underinsurance waiver – what is it?

Building insurance with a waiver of underinsurance (UVV) reimburses the policyholder in full for the costs incurred in the event of a claim (in some cases only up to an agreed sum insured). The insurer assures the policyholder by means of a waiver of underinsurance that it will refrain from checking the underinsurance in the event of a claim.

Waiver of underinsurance – The most important points

• Underinsurance in buildings insurance is when the policyholder has not insured their building sufficiently.
• In the event of underinsurance, the insurer will only partially cover the costs in the event of a claim.
• In the event of a claim, the difference must be paid by the policyholder.
• If the insurer grants a waiver of underinsurance, the insurer will generally reimburse the full amount of damage even in the event of underinsurance.

Underinsurance waiver with Wert14

The digital valuation tool Wert14 and the associated Wert14 BuildingReport have now become the industry standard for building valuations. Our customers are convinced by Wert14 — which is why more than 30 insurers grant an extended underinsurance waiver of up to 15 million euros on the professional Wert14 BuildingReport.

Close UVV declaration with Wert14

Would you like to offer your agents and brokers an exclusive UVV when using Wert14 to determine the value of buildings? Then please contact sales@skendata.de.

Benefit from the numerous advantages of a UVV with Wert14:

• Inclusion in the publicly accessible UVV overview
• Clear, transparent UVV regulation
• Sales argument: Simple handling for brokers and intermediaries
• Competitiveness
• Independent valuation